Dean Foods Swings to Profit on Lower Milk Costs
May 10 2016 - 8:41AM
Dow Jones News
By Austen Hufford
Dean Foods Co. swung to a profit in its first quarter as lower
milk prices continued to boost results.
Earnings topped Wall Street expectations, and the company
offered upbeat guidance for the current quarter.
Dallas-based Dean Foods has been aiming to shift more of its
business toward branded milk and ice cream products that command
higher profits, at a time when alternatives like almond and soy
milk have cut into sales of traditional cow's milk.
Still, lower raw milk prices have helped the company's results
in recent quarters, working to offset declining volumes. In the
most recent quarter, raw milk costs fell 14% from the same quarter
a year ago. Volume declined 3.2% and the company lost market share
on both a sequential and year-over-year basis.
In March, Dean Foods said it didn't expect a planned Wal-Mart
Stores Inc. dairy processing plant in Indiana to have a material
effect on its financial results but that it estimates the plant
will result in the loss of roughly 100 million gallons of
low-margin, private-table fluid milk volume beginning late next
year.
Chief Executive Gregg Tanner said in a news release Tuesday that
the company expects low single-digit volume declines and slightly
decreasing raw milk costs in the second quarter, resulting in
earnings per share between 32 cents and 40 cents. Analysts polled
by Thomson Reuters had expected 34 cents a share.
In all for the quarter, Dean Foods reported a profit of $39
million, or 43 cents a share, compared with a loss of $74 million,
or 78 cents a share, a year earlier. Excluding certain items,
earnings rose to 45 cents from 24 cents a share.
Revenue declined 8.4% to $1.88 billion.
Analysts projected 38 cents in per-share profit and $1.89
billion in revenue, according to Thomson Reuters.
Shares in the company, down 9% in the past three months, were
inactive in premarket trading.
Write to Austen Hufford at austen.hufford@wsj.com
(END) Dow Jones Newswires
May 10, 2016 08:26 ET (12:26 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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